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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
Alpha Natural Resources Inc has a M-score of -2.10 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of Alpha Natural Resources Inc was -0.58. The lowest was -4.09. And the median was -2.87.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of Alpha Natural Resources Inc for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 1.0469||+||0.528 * 3.6059||+||0.404 * 0.5908||+||0.892 * 0.7594||+||0.115 * 1.0174|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.183||+||4.679 * -0.1231||-||0.327 * 1.1599|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $307 Mil.|
Revenue was 1054.098 + 1111.773 + 1093.7 + 1191.094 = $4,451 Mil.
Gross Profit was 103.121 + 65.793 + 75.75 + -54.53 = $190 Mil.
Total Current Assets was $2,038 Mil.
Total Assets was $11,421 Mil.
Property, Plant and Equipment(Net PPE) was $8,640 Mil.
Depreciation, Depletion and Amortization(DDA) was $880 Mil.
Selling, General & Admin. Expense(SGA) was $162 Mil.
Total Current Liabilities was $971 Mil.
Long-Term Debt was $3,820 Mil.
Net Income was -512.627 + -55.698 + -358.788 + -458.241 = $-1,385 Mil.
Non Operating Income was 0.74 + 249.683 + -8.063 + 7.435 = $250 Mil.
Cash Flow from Operations was -217.048 + -53.961 + -69.561 + 111.083 = $-229 Mil.
|Accounts Receivable was $386 Mil.
Revenue was 1335.123 + 1333.591 + 1558.353 + 1633.809 = $5,861 Mil.
Gross Profit was 70.629 + 157.584 + 467.792 + 206.828 = $903 Mil.
Total Current Assets was $1,977 Mil.
Total Assets was $12,598 Mil.
Property, Plant and Equipment(Net PPE) was $9,234 Mil.
Depreciation, Depletion and Amortization(DDA) was $959 Mil.
Selling, General & Admin. Expense(SGA) was $181 Mil.
Total Current Liabilities was $1,202 Mil.
Long-Term Debt was $3,355 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(307.277 / 4450.665)||/||(386.495 / 5860.876)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(65.793 / 5860.876)||/||(103.121 / 4450.665)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (2038.29 + 8640.02) / 11421.134)||/||(1 - (1976.716 + 9234.488) / 12598.194)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(959.092 / (959.092 + 9234.488))||/||(880.396 / (880.396 + 8640.02))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(162.176 / 4450.665)||/||(180.531 / 5860.876)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((3820.483 + 971.319) / 11421.134)||/||((3354.799 + 1202.103) / 12598.194)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(-1385.354 - 249.795||-||-229.487)||/||11421.134|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
Alpha Natural Resources Inc has a M-score of -2.10 signals that the company is likely to be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
Alpha Natural Resources Inc Annual Data
Alpha Natural Resources Inc Quarterly Data